The Canadian Sustainability Standards Board (CSSB) has announced the release of the finalized Canadian Sustainability Disclosure Standards (CSDSs) — CSDS 1 and CSDS 2. The standards and their accompanying Bases for Conclusions are now a part of the CPA Canada Handbook - Sustainability. 

Private market firms, asset managers, and impact investors with a portfolio of companies operating in Canada should consider the standards for potential opportunities, as it is expected to standardize sustainability reporting across various industries in Canada. 

Let’s explore CSDS 1 and CSDS2 in detail.

About the Canadian Sustainability Disclosure Standards

The CSDS is a set of rules or a regulatory framework that is divided into two parts: CSDS 1 and CSDS 2. CSDS 1 is concerned with General Requirements for the Disclosure of Sustainability-related Financial Information, and CSDS 2 is concerned about Climate-related Disclosures. Initially, the CSSB proposed sustainability and climate reporting standards in March 2024, and after getting feedback from stakeholders, investors, and other entities, it was finalized with a series of modifications. 

The standards align with IFRS S1 and IFRS S2. However, it adds more for the businesses to prepare for key elements of reporting, such as value chain GHG emissions, according to the Canadian context. 

“Today’s announcement signifies our commitment to advancing sustainability reporting that aligns with international baseline standards – while reflecting the Canadian context. These standards set the stage for high-quality and consistent sustainability disclosures, essential for informed decision-making and public trust.” — said Bruce Marchand, the CSSB Interim Chair, following the standards release.

Key aspects of the Canadian Sustainability Disclosure Standards

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  The large federally incorporated companies are required to comply with the CSDS. However, there is growing expectation for public companies to align with these standards to promote sustainability disclosures. 

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  The CSDS 1 and CSDS 2 are modified for transition relief in the public interest of Canada. The additional transition relief of one year is given to each of the following: 
  • The effective date of the CSDS standards.
  • The start date on which reporting on sustainability matters other than climate change begins.
  • The starting date for reporting Scope 3 GHG emissions.

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  In addition, the CSSB included the following transition reliefs on the final edition of CSDS 1 and CSDS 2:
  • 
    Two further years of relief for the start of aligned reporting, with such reporting required during the first six months after the second and third year ends, respectively.
  • 
    Three years of relief for the quantitative components of scenario analysis data reporting.

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  The board also stated that it would continue to seek feedback and provide resources to assist CSDS adoption as part of a planned multi-year strategy that will be released for public discussion in January 2025.

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